Ministers from the oil-producing cartel OPEC, meeting in Osaka, Japan, have decided to keep production levels the same for the last three months of the year. The decision comes despite concerns over the effect rising oil prices have on the global economy.

Saudi Arabia, the most powerful player in OPEC, argued in favor of raising crude oil production and lowering prices slightly at the group's Thursday meeting in Osaka, Japan.

However, it ultimately backed down and sided with the majority of OPEC's other 10 members, who oppose increasing output now to avoid creating a surplus that pushes prices down. The Organization of the Petroleum Exporting Countries will maintain its official supply ceiling of 21.7 million barrels a day.

But the wild card is Iraq, since oil prices are sensitive to Middle East politics. Fears of a possible U.S. led war against Iraq to topple Saddam Hussein have led to volatility. The price of crude oil has been swinging between $27 and $30 a barrel, as traders price in a so-called war premium. OPEC aims to keep the price between $22 and $28 a barrel.

The likelihood of military action against Iraq has eased over the past few days, after Baghdad suddenly agreed to allow United Nations weapons inspections.

"What OPEC oil ministers have seen is oil prices come off a dollar or so this week as that news has come out - and that has confirmed their suspicion that there was a 'war premium,' " says Jim Washer, an oil market analyst for the London-based Energy Intelligence Group. " So there was not a fundamental need to increase production going into the fourth quarter."

Many governments around the world are likely to disagree with the decision, at a time when the world economy is fragile and the northern hemisphere is heading toward winter, the peak demand season for fuel.

Consumers in many countries, including the United States, fear that tight supplies could lead to even higher prices.

OPEC ministers say they will review their policy at another meeting on December 12.